[Limdep Nlogit List] Welfare Measures in the Nested Logit Model with Covariance heterogeneity

Mikołaj Czajkowski miq at wne.uw.edu.pl
Sat Dec 20 09:39:10 EST 2008

Mikołaj Czajkowski wrote:
> Dear All,
> I am using the Nested Logit Model with Covariance Heterogeneity and I 
> would like to estimate welfare measures. 
> [...]
> My questions are as follows:
> 1. Could anyone verify if the formula is ok?
> I would also appreciate some suggestions on papers / books where I 
> could see how to derive welfare measures for the nested logit model. I 
> understand that the utility of each alternative is weighted by the 
> probability of selecting it, but I can't seem to be able to derive it 
> myself.
> 2. In case of the nested model with covariance heterogeneity - if I am 
> interested in the mean CV, should I use individual-specific or sample 
> mean values of attributes explaining inclusive value parameters?
> I have specified the CV formula using the WALD command, however I am 
> not sure whether variables or their means should be used as covariates 
> of inclusive value parameters. Both approaches seem to give different 
> results.
> I would appreciate all the comments you might have. Thank you very 
> much in advance. 

My message got its attachment cut out so I've put the formula on the web 
page as html:


or as pdf:


Once again - thanks in advance for your comments.

    Mikołaj Czajkowski

    Warsaw Ecological Economics Center
    University of Warsaw

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